Rare Earths: Price Level on the Commodity Markets Remains High

Source: iStock/Sunshine Seeds

Mining of rare earth metals to be stepped up. Expert sees ingredients for perfect storm in commodity markets.

Commodities continue to rise in price. Besides the Ukraine war, the reasons for this include increasing demand and continued logistical disruption of supply chains due to the pandemic. Supply shocks and high energy prices are also now driving commodity prices higher. Benedikt Sobotka, CEO of natural resources producer Eurasian Natural Resources (ERG), sees the current situation as having “all the ingredients for a perfect storm in commodity markets,” as he expressed at the Reuters Global Markets Forum in Davos in late May 2022. The Luxembourg-Kazakhstan-based company is one of the largest producers of cobalt and copper, according to its own statements.

Future Technologies Drive Demand on Commodity Markets

Rising commodity prices are only at the beginning, and the commodity supercycle that is now beginning could last for the next 30 years, he said, which is especially true for rare earth metals. Sobotka added that even the most minor supply disruptions could lead to major price fluctuations. The situation is exacerbated by a lack of investment in mining rare earths and metals, which are now needed for the energy transitionand booming electromobility, he added. To cope with the current demand for these future technologies, investments of between $200 billion and $300 billion are needed in raw materials mining – and that on an annual basis, the ERG boss said.

Rethinking of Raw Material Supply for the EU

The recently presented RePowerEU plan envisages, among other things, almost doubling the share of renewable energies in Europe by 2030. However, the raw materials required for this should not lead to new dependencies because of gas supplies from Russia, said EU Commission President Ursula von der Leyen at this year’s World Economic Forum in Davos. Rather, the Commission had concluded strategic raw materials partnerships with countries such as Canada, and others would follow.